Friday, June 22, 2007

BK Boreyko, President and CEO of New Vision and Vemma, traces the nutrition industry's evolution toward more liquid products. "Technology in the 1980s was tableting; in the 90's it was capsules; and now we've moved into liquids," he explains. "People get pill fatigue. USA Today said that 85 percent of Americans supplement, but they get tired of swallowing all those pills. And liquids appeal to either end of the age spectrum. Their nutrients are easily absorbed by adults, and the good taste passes the kid test."

One of the early entrants into the nutritional beverage category was Tahitian Noni International (TNI), which offers Tahitian Noni® juice, based on a fruit native to the islands of Tahiti. The noni plant produces a greenish-gold fruit that reportedly supports the immune system, boosts energy levels and is rich in antioxidants. TNI has expanded to more than 70 countries with several product lines and even cafés, all based on noni. The company's first year's sales totaled well more than $6 million; sales in 2005 were $531 million.

Shon Whitney, TNI's Vice President of Marketing Communications, says the choice of a liquid form for Tahitian Noni® juice dates to when founder John Wadsworth sampled the noni fruit in Tahiti and was convinced that the incredible product should be offered to the world. "Juice is noni's traditional preparation but, on the business side, it's easily consumable," he says. "We found early on that people would buy it and use it very quickly. Then they wanted more."

For CyberWize, which markets Tunguska Blast, the decision to offer a liquid rather than a pill or capsule was based on nutritional effectiveness-what the industry calls efficacy. CyberWize's Vice President of International Development Mark Baker says the product's powerful antioxidants are most effectively delivered as a liquid."Short of injecting them into a vein, the best way to consume them is orally in liquid form," Baker says. "Pills and tablets are not fully digestible, especially by the mature population. It's estimated that in individuals over 50 years old, as much as 70 percent of pills pass through the digestive system intact. The body has to break down everything it consumes into a liquid, anyway. A tonic is a superior delivery system." Launched early this year, monthly sales of herb-based Tunguska Blast have grown 15 to 20 percent a month.

Pharmanex based its decision to add a liquid supplement to its already extensive product line on research. "We looked at the overall business opportunity, and the category itself is focusing on juices," explains Joe Chang, Ph.D., Executive Scientific Officer and Executive Vice President, Product Development at Pharmanex's parent company Nu Skin. "Whenever any company does a market survey, most consumers are more favorable to drinking something rather than swallowing something. When a person opens the bottle and drinks three or four ounces of the product every time they open the fridge, they take the daily dose easily. At the end of the day, we must make it easy for the consumer to take our product." Chang also notes the company felt that launching a liquid could be a risk. "We thought if we offered a liquid supplement that people would migrate from our capsules and pills over to the liquid," he says. "But we're finding that the liquid supplement actually adds to increased consumption of Life Pack, our best-selling product. It was an interesting, unexpected dynamic. There has been very little cannibalization of revenue." Pharmanex launched its liquid "superfruit" product, which it calls g3T, in the United States in 2005 and in early 2006 in its more than 40 other markets. G3 is now its No. 2 seller, globally.

The Limu Company took its sea-plant-based beverage, Original LimuT, into 20 countries in 12 months, doing $10 million in wholesale business in its first year. "That's unheard of for first-year companies in direct selling," says company President Gary Raser. Now 3 years old, the company continues to grow rapidly. "Every month for the last 12 months, we've had double-digit growth over the previous month," he says. Explaining the liquid form of his company's product, Raser says, "Our main product is a sea vegetable, and it's in its most efficacious form if kept liquid. We flavor it with all-natural, organic papaya and mango purée to give it a flavor that consumers enjoy. In bringing the product to market, we found that a liquid form is also easier to take than handfuls of pills. It doesn't replace them, it's just an easier, new form as opposed to pills. But for us, liquid is the only option, because it offers the most nutritional benefit."

Juice was a natural choice for XanGo's mangosteen-based beverage. "The average American consumer opens their fridge 34 times a day," says John Digles, Senior Vice President, Sales and Marketing. "When they have a juice right there smiling at them and they like the taste, you can build brand loyalty. Taste is a significant factor in creating a premium brand so, because the mangosteen fruit is a gorgeous-tasting creation, juice seemed like the perfect delivery system to bring the whole fruit to the marketplace." Now offering a product in 14 countries, 4-year-old XanGo had triple-digit annual sales growth until 2005. The company expects 30 percent sales growth this year.

4Life Research wanted to reach an audience that had difficulty popping pills. So it put its primary product, Transfer Factor®, into a fruit-based beverage it calls RioVidaT. "Liquids cross barriers with children or others who have a hard time swallowing pills," says 4Life's Senior Vice President of Marketing Trent Tenney. "RioVida has enabled us to get Transfer Factor to many people around the world." After two years of research, in May 2005 4Life launched RioVida in 40 countries. It uses a blend of açai berry, pomegranate, blueberry, elderberry, grape and apple juices with Transfer Factor, which combines nutritional elements from cow colostrum and egg yolks.

Making Quality Consumable

As they manufacture and bottle their liquid supplements, direct sellers are committed to quality, sometimes owning their manufacturing facilities. Those who contract with manufacturers or bottlers go to great lengths to ensure that they deliver safe, consistent, fresh, high-quality products.

"We own our own manufacturing facility for liquid products," notes BK Boreyko of New Vision, which markets Forté Juice and other nutrition products. "From raw materials to the final product, every step of the way we have testing and checks put in place. And owning our own manufacturing facility lets us deliver more quickly. When a consumer's bottle of Forté Juice is delivered, they can be assured that it was manufactured just four to six weeks ago, on average."

CyberWize starts the Tunguska Blast manufacturing process in Siberia where the product's 10 herbs are harvested and blended. "The Russian company we work with has been doing this with the same herbs for years and worked out the bugs decades ago," CyberWize President Mark McCool says. "Then we bring it to the United States, where we work with a GMP-certified (good manufacturing process) bottling plant. We make regular visits to the plant to test and ensure that our product is of consistently high quality."

For XanGo, "It's a real process," Digles says. "The mangosteen is a fragile fruit, and we give it tender loving care to get it where it is. We have farms in Southeast Asia growing the best product; then we pick only the best fruit and purée it, so consumers are getting the whole fruit. Then it goes through rigorous, standardized testing to ensure that we're giving people a consistently high-quality product. One of our goals is sustained sales, and people won't come back if you're not giving them a consistently great product."

Tahitian Noni International harvests noni from 80 Polynesian islands and brings it to a central point in Tahiti for processing. From there, the process moves to various bottling plants around the world to satisfy the requirements of different regions. The process is complex-harvester certification of, quality control on the island before the product leaves Tahiti then more quality control during bottling. "The purée process alone is checked every four minutes," TNI's Whitney says. "Six times during processing the product is checked for quality and safety. It's a big deal to us to be sure that Tahitian Noni is safe and consistent."

The Limu Company has an independent third party check every batch of Original Limu. "That's important, because you stake your reputation on the integrity and quality of the product," Limu's Raser says. "We have to ensure that every bottle is consistent, safe and good-tasting. All those things are critically important to our continued success."

Pharmanex also follows GMP standards. "We employ six specific steps in our quality manufacturing process-selection of fruit; qualification of vendors and suppliers; standardization; identification and assurance of active ingredients; safety; and science and substantiation studies," Chang says. "If you don't make a good-quality product, someone will buy it once, but it's unlikely they'll come back again. Once we've captured a customer, we like the product itself to keep the customer in the family."

Rejecting Retail

Direct sellers know that their products' consumers roughly reflect the demographics of their distributors-above the age of 35 and usually female. They're often the family caregivers, and their families rely on them. To reach those consumers in a way that makes their nutrition beverages stand out from the crowded field of competitors, company executives feel that direct selling stands head-and-shoulders above any other sales and distribution method.

TNI's Whitney explained a line of reasoning echoed by others. "In a traditional product introduction, you would put the product on a store shelf and use advertising to explain to the public why they should purchase it," he says. "Just a few large companies hold sway about what is on the shelves and where it is displayed. With a product like ours, in the early years no one had heard the name noni, much less why they should buy. Direct selling was a perfect way to tell such a rich story, and we've found it to be very effective. In the last few years, several of our competitors have attempted to go retail, but no one is more than 10 percent of our size. We have repeat sales at the 90 percent rate. Direct selling is absolutely perfect for this kind of product."

XanGo's Digles agrees. "It comes down to more than 500,000 passionate advocates worldwide," he says. "Word-of-mouth on XanGo juice, its taste and brand cachet have been a key part of our business. Customers try it, like it and keep coming back. That lets our distributors build relationships, giving consumers a sense of personal service."

4Life's Tenney notes that his distributors' familiarity with the consumers they serve is a huge benefit. "The primary advantage with direct selling is that you know who you're speaking to," he says. "You have an audience who you've identified as a person who is interested in nutritional products, as opposed to putting the product on a shelf with an untrained clerk and not knowing the end user. We know the users of our products, what they're looking for and their aspirations."